Relationship Marketing Strategy and implementation

melting these elements in a vacuum furnace, creating small ingots of spe-
cific alloys which are then cast by another manufacturer into turbocharger
wheels, jet engine turbine fins and other items used under conditions of
high temperature and stress. A small miscalculation in alloy composition
could ultimately cause a jet aircraft to crash or a car or truck’s turbocharger
to explode. Since consistent high quality was so critical, only certain
vacuum melters were certified by aerospace and automotive companies to
produce the required alloys. SVM, being a leader and very well respected
in the industry, was certified by all the major aerospace and automotive
companies.
Keegan then reviewed what her company files contained about SVM
and its customers. Historically TNM had spent little time and energy on
understanding its customers’ customers and information in this area was
scarce. Keegan called Dr Bearing of SVM and explained that a key compo-
nent of relationship marketing was to develop new ways to add customer
value in the relationship. An understanding of SVM’s value chain would
assist in this effort. After a brief discussion with Dr Bearing, a supply/
value chain was outlined (Figure 3.3.1).
The chain starts with the nickel miner, smelter and refiner (TNM), which
sells nickel ingots to a melter such as SVM, which combines the nickel with
other metals such as cobalt and chrome to produce very high quality alloys
for specific uses. These alloy ingots are then sold to an investment casting
turbocharger manufacturer, which then produces turbocharger blades to
very exacting specifications, becoming one component in automobile or
truck turbochargers, which are then sold to a transmission manufacturer
and become part of an automobile or truck drive system. The transmission
manufacturer is a first-tier supplier to an automobile or truck assembler,
which puts the transmission in the vehicle. The vehicle, through the inter-
mediary of a dealer, is then sold to the final user – the consumer.

212 Relationship Marketing

TNM sells

based on

LME price

SVM

purchases

nickel at

variable

price

TURBOCO

seeks fixed

price from

ALLOYCO

TRANSCO

seeks fixed

price from

TURBOCO

CARCO

seeks fixed

price from

TRANSCO

Customer

seeks fixed

price from

CARCO

DEMAND & COMMUNICATION

Full

price

exposure

Higher

prices to

offset

exposure

Higher

prices to

offset

TURBO

price

Higher

prices to

offset

TRANSCO

price

Figure 3.3.1 Value chain – nickel to auto.